How Many Federal Agencies Does it Take to Interpret the Industrial Hemp Law? USDA/DEA/FDA Weigh in on Industrial Hemp Research Requirements

This is third in a series of in-depth reviews of the Drug Enforcement Administration’s (“DEA’s”) and other federal agencies’ recent decisions/notices on marijuana and industrial hemp issued on August 12, 2016. Previously, we reviewed DEA’s policy expanding the number of marijuana cultivators for research and the agency’s denial of petitions to reschedule marijuana from schedule I in depth (see our previous posts here and here). This analysis focuses on the joint statement by the United States Department of Agriculture (“USDA”)/DEA/Food and Drug Administration (“FDA”) on industrial hemp principles under the Agricultural Act of 2014.

The USDA, in consultation with DEA and FDA, issued a Statement of Principles on how individuals, universities and states can participate in industrial hemp pilot programs in compliance with the Agricultural Act of 2014. Statement of Principles on Industrial Hemp, 81 Fed. Reg. 53,395 (Aug. 12, 2016). The notice acknowledged that while the states were authorized to conduct pilot programs under the law, the Act failed to provide a “specific delegation to the [USDA] or any other [federal] agency to implement the program.” Id. The notice also conceded that the Act “left open many questions” on the continued application of the federal Controlled Substances Act (“CSA”) to industrial hemp particularly related to private parties’ cultivation and sale of such products. Id. The Statement of Principles, while not establishing any binding legal requirements, is intended to “inform the public” on how Federal law applies to industrial hemp under state agricultural pilot programs. Id.

It is worth reviewing the current federal definitions relevant to industrial hemp. Under the 2014 Act, industrial hemp is the Cannabis sativa L. plant and any part of the plant, with a delta-9 tetrahydrocannabinol (“THC”) concentration of not more than 0.3% on a dry weight basis. 7 U.S.C. § 5940(b)(2). Under the CSA, THC is controlled as a schedule I substance. 21 U.S.C. § 812(c)(a)(c)(17). Thus, products containing any quantity of THC, including hemp, are schedule I substances. However, regulations promulgated by DEA exempt certain products that contain THC from control if (1) they are made from certain parts of the Cannabis plant (including the mature stalks, fiber from such stalks, oil or cake made from the seeds of the plant, and sterilized seeds incapable of germination and (2) if they are not intended for human consumption. 21 C.F.R. § 1308.35(a). Industrial hemp containing THC can be used in a wide range of paper, rope, clothing, textiles, shampoo, soap, body lotion and animal feed products.

The USDA emphasized that the 2014 Act did not amend the Food, Drug, and Cosmetic Act related to approval of new drug applications nor did it alter the requirements of the CSA related to the manufacture, distribution or dispensing of substances derived from the Cannabis plant. Statement of Principles at 53,396. So, what is authorized under the 2014 Act?

According to the USDA/DEA/FDA Statement of Principles, the 2014 Act limits the cultivation of industrial hemp to agricultural pilot programs for research meaning “to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture” where industrial hemp production is legal under state law. Id. at 53,395. State pilot programs must register and certify industrial hemp cultivation sites, with registrations to include the manufacturer’s name, licensure period that the state authorizes the activity, and the location. Id. The Statement of Principles restricts industrial hemp cultivation to state departments of agriculture and persons authorized by them to conduct research under a pilot program, as well as universities, or persons employed by or under contract or lease with universities to conduct research. Id. Over 30 states have established industrial hemp research or pilot programs that authorize hemp industry studies or commercial industrial hemp programs. State Industrial Hemp Statutes, National Conference of State Legislatures.

The Statement of Principles state that the sale of industrial hemp products is restricted within states or among states with pilot programs for marketing research by universities or state departments of agriculture. Id. Industrial hemp products cannot be sold for “general commercial activity” and cannot be sold in states that prohibit such sales. Id. Industrial hemp plants and seeds cannot be transported across state lines. Id. The Statement of Principles further note that although the law authorizes certain entities to cultivate industrial hemp, only DEA-registered importers can import viable cannabis seeds and USDA phytosanitary requirements that apply to plant material also apply to the importation of industrial hemp seed. Id. at 53,395-96.

So, in looking at the three recent notices related to marijuana, it is clear that the federal government is clarifying and removing previous obstacles related to research involving marijuana. The government’s actions encourage responsible research of hemp as an agricultural commodity and industrial product in states where it is allowed. Registration with a state department of agriculture (for industrial hemp under pilot programs) and DEA (marijuana for research) are critical components of the government’s regulatory scheme. Interestingly the Statement of Principles requires registration of industrial hemp cultivation sites by a state’s department of agriculture rather than a controlled substance authority or law enforcement agency. We anticipate the federal government incorporating registration as well as recordkeeping, reporting, inspections and plant testing into its regulatory regimen to closely regulate marijuana and industrial hemp as private entities outside the states become involved in research, cultivation, manufacturing and distribution activities with those substances.

One cannot help concluding, when considering the recent marijuana and industrial hemp decisions together, that the federal government is trying to find a way to maintain its authority in the face of a growing majority of less restrictive state laws. These measures may help minimize some aspect of the federal/state conflict in the short run, especially in encouraging research. However, there will be no reconciliation of state and federal law until the ultimate question is resolved: whether marijuana has a legitimate medical use.